Luxury paves way for affordable housing

The numbers certainly paint a gloomy picture for luxury housing, but it is inappropriate to sound its death knell. Despite its relatively small market size, luxury housing is still an important segment of Indian real estate.

Luxury housing has its own clientele - a specific class of people who aspire to live in high-class homes in key locations, embellished with state-of-art amenities. The robust Indian economy, coupled with the mushrooming of a myriad successful start-up, has given rise to a new breed of entrepreneurs who have not acquired ‘old wealth’ but earned it. These people, largely millennials, have risen above the middle-class median and prefer to live accordingly. Such demand is not swayed by market sentiments and warnings signals - it has its very own propulsion engine which does not run on regular fuel.

According to the Johannesburg-based New World Wealth report, the number of millionaires in India stood at 3,30,000 individuals in 2017. While this is just a tiny fraction of India’s total population, this number is expected to reach over 9,50,000 by 2027 - a 190 per cent increase. Also, within the Asia-Pacific region, India has the fourth-largest population of millionaires, while in the Forbes list of the ‘World’s Billionaires’ for 2017, India accounts for an impressive 101.  These people don’t really care where the market is headed - what they want is as big a helping of a designer cake as they can afford to buy. So, while luxury housing is not rising spectacularly in the overall sweepstakes, it isn’t going away either. It is quite the contrary, in fact.

While affordable housing is undoubtedly the flavour of the season, luxury homes have not lost their lustre. Our data reveals a remarkable and unsuspected resilience in this segment. Thus, while luxury real estate has remained subdued since 2013, it is now picking up. Besides, the fact that HNIs went slower on buying coincides with their trademark trait of being vigilant managers of their own money, and highly risk-averse temperament. 

Today’s ultra-rich typically prefer to live life king-size. From theme-based homes to smart homes to state-of-art amenities, the expectations of luxury buyers are growing constantly. Most look for experiential luxury, which is prompting developers to collaborate with branded designer labels like Armani and even international hotel chains.

Four Seasons Private Residences, Mumbai is a perfect example of such developments. The priority for most of these projects is to offer discreet luxury with a limited number of units per project. While such residences come with a heavy price tag, they are fully managed and serviced. Other perks include a proper house-keeping team to manage these homes, room-service facility and concierges, among other such enticements.

While most builders have followed the tide and shifted their focus almost entirely to affordable housing, a handful of them in each of the top cities continue to bet on luxury homes. These established and well-capitalized builders across MMR, NCR, Pune and Bengaluru have understood that if the location, quality, craftsmanship and service standards of their luxury offerings are done right, they will succeed. There will continue to be considerable demand for luxury housing from the ultra-rich and non-resident Indians who have returned with full coffers to their country of origin.